this week also saw the release of the first two regional Fed manufacturing surveys for October: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index fell from -2.0 in September to -6.8 in October, suggesting that First District manufacturing was now contracting at a faster pace, while the Philadelphia Fed Manufacturing Survey for August, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions fell from +12.8 in September to +9.7% in October, suggesting that the region's manufacturing continues to grow, albeit at a more moderate pace...

September CPI up 0.3% on Higher Energy and Shelter Costs

the consumer price index increased by 0.3% in September, as price increases for energy and housing were only partially offset by lower prices for groceries and clothing...the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index rose 0.3% in September after it had risen 0.2% in August, been unchanged in July, and rose 0.2% in both May and June....the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 240.849 in August to 241.428 in September, which left it statistically 1.464% higher than the 237.945 index reading of last September, which is reported as a 1.5% YoY increase....regionally, prices for urban consumers have risen 2.0% in the West, 1.3% in the Northeast, 1.4% in the South, and 1.1% in the Midwest over the past year, with generally greater price increases within regions in cities of more than 1,500,000 people...with higher prices for energy driving the gain in the overall index, seasonally adjusted core prices, which exclude food and energy, rose by 0.1% for the month, with the unadjusted core index rising from 248.278 to 248.731, which put it 2.21% ahead of its year ago reading of 243.359...

the volatile seasonally adjusted energy price index increased by 2.9% in September, after it had been unchanged in August and fell by 1.6% in July...since the energy price index fell by more than 11.5% over this past winter, it still remains 2.9% below its level in September of a year ago....prices for energy commodities were 5.5% higher while the index for energy services rose by 0.7%, after rising by 0.8% in August....the increase in the energy commodity index included a 5.8% hike in the price of gasoline, the largest component, and a 2.4% increase in the price of fuel oil, while prices for other fuels, including propane, kerosene and firewood, rose by an average of 0.6%…within energy services, the index for utility gas service rose by 0.8% after increasing by 2.1% in August and by 3.1% in July, and hence utility gas is now priced 2.9% higher than it was a year ago, while the electricity price index rose by 0.7%, after increasing by 0.5% in August...energy commodities are still priced 6.4% below their year ago levels, with gasoline prices averaging 6.5% lower than they were a year ago...meanwhile, the energy services price index is now 0.7% higher than last September, as even electricity prices have increased by 0.1% over that period..

the seasonally adjusted food price index was unchanged in September, just as it was in July and August, as 0.1% lower prices for food purchased for use at home offset 0.2% higher prices for food bought to eat away from home, where average prices at both fast food outlets and at full service restaurants rose 0.2%...the food price index is now 0.3% lower than a year ago, as a 2.2% decrease in the price of food at home was mostly offset by a 2.4% increase in prices for food away from home, which included a 3.7% increase in prices of lunches at elementary and secondary schools...

in the food at home categories, the price index for cereals and bakery products was 0.1% higher as 2.4% lower prices for rice and a 1.4% decrease in prices for bread other than white bread largely offset a 2.7% increase for crackers, bread, and cracker products and a 1.0% increase in flour and prepared flour mixes...the price index for the meats, poultry, fish, and eggs group fell by 0.2% as 0.5% lower prices for beef and 0.7% lower prices for pork more than offset 0.7% higher prices for poultry and 0.7% higher prices for fish...meanwhile, the index for dairy products was 0.1% higher as a 1.2% increase in prices for fresh whole milk was offset by 1.9% cut in ice cream prices and a 0.5% decrease in prices for cheese...the fruits and vegetables index was 0.3% lower, as a 4.8% increase in prices for oranges and a 2.7% increase in tomato prices was more than offset by generally lower prices for other fresh and processed fruits and vegetables...the beverages index was 0.4% lower as a 1.3% increase in the price of roast coffee was more than offset by 1.9% lower prices for instant and freeze dried coffee, 0.8% lower prices for juices and 0.6% lower prices for carbonated drinks...lastly, prices in the other foods at home category were on average 0.1% higher, as 1.3% higher soups and 2.7% higher priced olives, pickles, relishes was only partially offset by 1.6% lower priced butter, which should really be included with dairy products...among food at home line items, only eggs, which are now priced 37.6% lower than a year ago, have seen a price change greater than 10% over the past year...the itemized list for price changes in over 100 separate food items is included at the beginning of Table 2, which gives us a line item breakdown for prices of more than 200 CPI items overall...

among the seasonally adjusted core components of the CPI, which rose by 0.1% in September after rising by 0.3% in August, 0.1% in July and by 0.2% in April, in May and in June, the composite of all goods less food and energy goods fell by 0.1%, while the composite for all services less energy services was 0.2% higher....among the goods components, which will be used by the Bureau of Economic Analysis to adjust September retail sales for inflation in national accounts data, the index for household furnishings and supplies was unchanged as a 1.0% drop in prices for appliances was offset by 0.5% higher prices for living room, kitchen, and dining room furniture and 0.9% higher prices for carpeting, while the apparel price index was 0.7% lower on a 1.3% drop in prices for men's and boy's apparel and a 8.2% decrease in prices for women's outwear...prices for transportation commodities other than fuel were down 0.2%, as prices for used cars and trucks were down 0.3% after falling 0.6% in August,1.0% in July, 1.1% in June and 1.3% in May, while prices for parts and equipment for vehicles also fell 0.7%...meanwhile, prices for medical care commodities were 0.6% higher after a revised 1.4% increase in August, on a 0.8% increase in prescription drug prices...on the other hand, the recreational commodities index fell 0.4% as another 3.0% drop in TV prices more than offset a 2.6% increase in prices for film and photographic supplies and a 0.8% increase in prices for recreational book reading materials...at the same time, the education and communication commodities index was 0.3% lower as a 1.4% price drop for telephone hardware more than offset a 0.7% increase in prices for college textbooks....lastly, a separate price index for alcoholic beverages was up 0.3% on 0.7% higher wine prices, while the price index for ‘other goods’ was up 0.4% on a 2.3% increase in prices for stationery, gift wrap and otter personal paper supplies..

within core services, the price index for shelter rose 0.4% on a 0.3% increase in rents, a 0.4% increase in owner's equivalent rent, and a 1.1% increase in costs for lodging away from home at hotels and motels, while costs for water, sewers and trash collection rose 0.5% and other household operation costs were 0.3% higher....meanwhile, the index for medical care services was unchanged as prices for both hospital services and physicians' services were unchanged while health insurance was 0.1% lower...at the same time, the transportation services index was also unchanged despite an 11.2% decrease in automobile service club membership fees, as airfares and motor vehicle insurance both rose 0.4%....the recreation services index rose 0.1% as admissions to sporting events rose 1.0% while video & audio rental services fell 0.9%..meanwhile, the index for education and communication services fell 0.4% as wireless telephone services fell 1.4% while college tuitions rose 0.3%...lastly, the index for other personal services was up 0.3% as tax return services rose 0.9% and legal fees rose 0.5%...among core prices, only televisions, which are now 22.0% cheaper than a year ago, and automobile service club membership fees, which are now down 10.5% from a year ago, saw prices change by more than 10% over the past year...

Estimating the Real Change in September Retail Sales Using the September CPI

with this CPI release for September, we can now attempt to estimate the economic impact of the September retail sales figures which were released last week, which saw nominal sales rise 0.6%...for the most accurate estimate, and the way the BEA will be figuring 3rd quarter GDP at the end of October, we would have to take each type of retail sales and adjust it with the appropriate change in price to determine real sales; for instance, September's clothing store sales, which were unchanged in dollars, should be adjusted with the price index for apparel, which indicated prices for clothing were down by 0.7%, which tells us that real retail sales of clothing were actually up by 0.7% September...then, to get a GDP relevant quarterly change, we'd have to compare such adjusted real clothing sales for July, August and September with the similarly adjusted real clothing consumption for the 3 months of the second quarter (April, May and June), and then repeat that process for each other type of retailer, obviously quite a tedious task to undertake manually. The short cut we usually take to get a quick and dirty estimate of the change in real sales for the month is to apply the composite price index of all commodities less food and energy commodities, which was down 0.1%, to retail sales less grocery, gas station, and restaurant sales, which accounts for nearly 70% of aggregate retail sales… in dollars, those sales were up by roughly 0.5% in September, while their composite price index was down 0.1%, meaning that real retail sales excluding food and energy sales were up by around 0.6%. then, for the rest of the retail aggregate, we find sales at food and beverage stores were up 0.1% in September, while prices for food at home were down 0.1%, suggesting a real increase of around 0.2% in the quantity of food & beverages purchased for the month. Next, sales at bars and restaurants were up 0.8% in dollars, but those dollars also bought 0.2% less “food away from home”, so real sales at bars and restaurants were up by about 0.6%. And while gas station sales were up 2.4%, gasoline prices were up 5.8%, suggesting a substantial real decrease in the amount of gasoline sold, with the caveat that gas stations sell more than gasoline, and we don't have a detailed breakout on that. Weighing the food and energy components at roughly 30% of total retail sales, and core sales at 70%, we can estimate that the aggregate of real retail sales in September were up about 0.5% from those of August…

next, to see how the change in real September sales impacts the change in 3rd quarter GDP, we have to compare those September sales to those of the 2nd quarter...now, to get an approximation of the real adjusted changes for September vis a vis the 3 months of the first quarter, we'd normally also have to adjust the September percentage changes for the upward revision to July and August sales that were included in the September retail report, which saw July sales revised from $457.7 billion to $458.5 billion and August's sales revised from $456.3 billion to almost $457.0 billion...however, since the net August revision is considerably less than 0.1%, it will not affect our September percentage increase, but the total $1.5 billion extra sales would still add 0.03 percentage points to GDP...next, using Table 7 in the pdf for the August personal income and outlays report, which gives us already inflation adjusted changes for the prior months, we find that real sales of goods were up 0.2% in May, up 0.4% in June, up 0.7% in July, and down 0.6% in August...that means real September sales, up 0.5% from August, were up about 0.6% from June, up about 1.0% from May, and up about 1.2% from April, or up more than 0.9% from the average of the 2nd quarter...aggregating real September goods sales as 100.5% of those in August shown in Table 7 of the August income and outlays report with July and August sales and comparing that to real 2nd quarter goods sales shown in Table 8, we find that real good sales grew 0.78% from the 2nd quarter to the 3rd, or at a 3.17% annual rate, a pace that would add at approximately .67 (+/-10%) percentage points to 3rd quarter GDP from the goods portion of personal consumption expenditures alone..

Industrial Production and Capacity Utilization Inch Up in September, after August and July Revised Lower

the Fed's G17 release on Industrial production and Capacity Utilization reported that industrial production "edged up" by 0.1% in September by after falling by a revised 0.5% in August...the percentage change from July to August was revised from down 0.4% to down 0.5%, while the percentage change from June to July was revised from up 0.6% to up 0.5%.......the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, was statistically unchanged at 104.2 in September; at the same time, the index for August was revised from the previously reported 104.4 to 104.2, while the July index was revised from 104.9 to 104.7, and the June reading for the index was revised from 104.3 to 104.2....for the 3rd quarter as compared to the 2nd quarter, industrial production increased at a 1.8% annual rate, its first quarterly increase in a year....however, year over year, production is still down 1.0%....

the manufacturing index, which accounts for more than 77% of the total IP index, increased by 0.2, from 102.9 in August to 103.1 in September, after August's manufacturing index was revised down from 103.0...July's manufacturing index, however, was revised higher, from 103.4 to 103.5...meanwhile, the mining index, which includes oil and gas well drilling, rose from 103.9 in August to 104.3 in September, after the August index was revised down from 105.6....the mining index still remains 9.4% lower than it was a year ago....finally, the utility index, which often fluctuates due to above or below normal temperatures, fell 1.0% in September, from 104.9 to 103.8, after the August utility index was revised higher...the previously reported 1.4% August decrease was revised to one of 0.3%, while the previously reported 2.1% July increase was revised lower, to an increase of 0.3%...

this report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry rose to 75.4% in September from 75.3% in August, which had previously been reported at 75.5% ...capacity utilization of NAICS durable goods production facilities slipped fell from 75.9% in August to 75.8% in September, after August's figure was revised up from 75.8%, while capacity utilization for non-durables producers rose from a downwardly revised 74.4% to 74.7%...capacity utilization for the mining sector rose to 75.5% in September, up from 75.0% in August, which was originally reported as 76.2%, while utilities were operating at 79.1% of capacity during September, down from their 80.0% of capacity during August, which was revised down from 80.4%...for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories....

Housing Starts Fall in September as Permits Rise

the September report on New Residential Construction (pdf) from the Census Bureau estimated that the widely watched count of new housing units started during the month was at a seasonally adjusted annual rate of 1,047,000, which was 9.0 percent (±9.2%)* below the revised August estimated annual rate of 1,150,000 housing unit starts, and was 11.9 percent (±11.9%) below last September's pace of 1,132,000 housing starts a year...the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell over the past month, with the figure in parenthesis the most likely range of the change indicated; in other words, September's housing starts could have been up by 0.2% or down by as much as 18.2% from those of August, with even larger revisions possible after a number of months...in this report, the annual rate for August housing starts was revised from the 1,142,000 reported last month to 1,150,000, while July starts, which were first reported at a 1,211,000 annual rate, were revised up from last month's initial revised figure of 1,212,000 annually to 1,218,000 annually with this report....

those annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 94,800 housing units were started in September, down from the 102,100 units started in August...of those housing units started in September, an estimated 68,000 were single family homes and 25,400 were units in structures with more than 5 units, up from the revised 66,700 single family starts in August, but down from the 34,000 units started in structures with more than 5 units in August...

the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data...in September, Census estimated new building permits were being issued at a seasonally adjusted annual rate of 1,225,000 housing units, which was 6.3 percent (±1.9%) above the revised August rate of 1,152,000 permits, and was 8.5 percent (±2.4%) above the rate of building permit issuance in September a year earlier...the annual rate for housing permits issued in August was revised from 1,139,000 up to 1,152,000 annually....again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for 107,600 housing units were issued in September, down a bit from the revised estimate of 108,400 new permits issued in August...the September permits included 62,900 permits for single family homes, down from 71,100 single family permits in August, and 41,200 permits for housing units in apartment buildings with 5 or more units, up from 33,900 such multifamily permits a month earlier... for more graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts decreased to 1.047 Million Annual Rate in September and Comments on September Housing Starts...

September Existing Home Sales Down 3.2% from August

the National Association of Realtors (NAR) reported that their seasonally adjusted count of existing home sales rose by 3.2% from August to September, projecting that 5.47 million homes would sell over an entire year if the September home sales pace were extrapolated over that year, a pace that was also 0.6% above the annual sales rate projected in September of a year ago; August sales, now logged at a 5.30 million annual rate, were revised down from the 5.33 annual rate indicated by last month's report...the NAR also reported that the median sales price for all existing-home types was $234,200 in September, down from $239,900 in August but 5.6% higher than in September a year earlier, which they report as "the 55th consecutive monthly year over year increase in home prices".....the NAR press release, which is titled "First-time Buyers Steer Existing-Home Sales Higher in September", is in easy to read plain English, so if you're interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release...as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process…

since this report is entirely seasonally adjusted and at a not very informative annual rate, we like to look at the raw data overview (pdf), which gives us a close approximation to the actual number of homes that sold each month...this unadjusted data indicates that roughly 484,000 homes sold in September, down by 10.2% from the 539,000 homes that sold in August, but up by 2.8% from the 471,000 homes that sold in September of last year, so we can see that it was just a seasonal adjustment that caused the annualized published figures to show an increase...that same pdf indicates that the median home selling price for all housing types fell 2.4%, from a revised $239,900 in August to $234,200 in September, while the average home sales price was $276,200, down 2.1% from the $282,000 average sales price in August, but up 4.2% from the $271,300 average home sales price of September a year ago, with the regional average home sales prices ranging from a low of $215,500 in the Midwest to a high of $372,200 in the West... for both seasonally adjusted and unadjusted graphs and additional commentary on this report, see the following two posts from Bill McBride at Calculated Risk: Existing Home Sales increased in September to 5.47 million SAAR and A Few Comments on September Existing Home Sales...

note on the graphs used here

in March a year ago the St Louis Fed, home to the FRED graphs, changed their graphs to an interactive format, which apparently necessitated eliminating some of the incompatible options which we had used in creating our static graphs before then...as a result, many of the FRED graphs we've included on this website previous to that date, all of which were all created and stored at the FRED site and which we'd always hyperlinked back there, were reformatted, which in many cases changed our bar graphs to line graphs, and some cases rendered them unreadable... however, you can still click the text links we've always used in referring to them to view versions of our graphs as interactive graphs on the FRED site, or in the case where an older graph has gone missing, click on the blank space where it had been in order to view it in the new format....